Discounts vs Store Credit Usage - How do they differ?

Magecredit applies store credit as a payment method, not a discount. This means that storecredit is subtracted from the grand total at the end of a order after all other discounts, shipping, tax, etc are applied. That being said, it can also be used in combination with a payment method.

It is important to understand the difference between store credit and discounts. Discounts are applied before tax, or after tax depending on your settings - it's up to you. That's configurable in Magento.

Store credit on the other hand is always applied after the grand total, after all tax. It is used like a payment method - like using your credit card, or paying down a bill with your bank account, etc. That's why the tax amount doesn't change when you subtract store credit from the total - and it shouldn't! That would be like the tax amount changing depending on what payment method you use - the government would not be too happy if you did that!

Are you including tax in product prices and trying to separate it out in the totals?

If you are including tax in product prices and trying to separate it out in the totals it can start to look a bit confusing in Magento:

In this example, store credit is actually applied upon the final Grand Total number so this calculation is 100% correct. Because this australian merchant has tax included in their catalog product prices and is choosing to show tax included as a separate line item in the totals, the numbers don't add up.